Portfolio Optimisation by Hand: Covariance Tables, Two- and Three-Asset Mixes, Minimum-Variance Portfolios, the Efficient Frontier & the Tangency Portfolio
Find the mixes that give the most return for each level of risk. You will turn monthly returns into means, volatilities and a covariance table, trace every two-asset mix, solve the minimum-variance weight, search a three-asset weight grid, mark the efficient frontier, add a risk-free asset to find the tangency portfolio and test how fragile the answer is, with every cell checked as you go.
One-time payment · lifetime access · lessons, labs, exam and certificate included · no subscription.
About this course
This course builds portfolio optimisation step by step in a spreadsheet, using a fictional savings club with three asset classes. You annualise monthly means and volatilities, write the covariance and correlation tables cell by cell with SUMPRODUCT, and trace every two-asset mix for three correlation values. You solve the minimum-variance weight in closed form and check it on a grid, calculate return and risk for three-asset weight triples, find the efficient frontier with MINIFS and COUNTIFS, pick the tangency portfolio by Sharpe ratio and test how a 60 % cap and changed estimates move the answer. All numbers are fictional and for learning only, not investment advice.
Lessons
- From Monthly Returns to Annual Means and Volatilities Pro
- Covariance and Correlation Tables, Written Out Cell by Cell Pro
- Two-Asset Mixes: Return, Risk and the Effect of Correlation Pro
- The Minimum-Variance Mix: Closed Form and Grid Check Pro
- Three Assets: A Weight Grid, Nine Covariance Terms and Feasibility Flags Pro
- The Efficient Frontier: Return Bands, Lowest Risk per Band and Dominated Mixes Pro
- Adding a Risk-Free Asset: Sharpe Ratios, the Tangency Mix and the Capital Allocation Line Pro
- Capstone: Weight Caps, Changed Estimates and How Fragile the Optimum Is Pro